CHAMBER OF COMMERCE.

Lyttelton Times, Volume XXXIII, Issue 2929, 30 May 1870, Page 2 (Supplement)

CHAMBER OF COMMERCE.

The quarterly meeting of the Chamber of Commerce was held at 3 p.m. on May 17. Present: Messrs Inglis (chairman), Gould, Hassal, J. E. Graham, Curtis, Twentyman, J. A. Bird, Turner, Montgomery, Warner, Walton, W. Wilson, L. E. Nathan, Stevens, Palmer, Walker, Foster, and Beauford. Mr William Rolleston (Superintendent), proposed by Mr Inglis, and seconded by Mr Montgomery, was balloted for, and duly elected a member of the Chamber.

The hon. Secretary read several letters from gentlemen in London, who had been requested by the Chamber to form themselves into a Wool Committee to collect information as to the scale of charges and commissions on the sale of wool in the English metropolis. On the motion of Mr Palmer, the hon. Secretary was instructed to acknowledge the receipt of the letters with thanks. The motion was unanimously agreed to.

The Chairman explained that it was in consequence of Mr Miles’ absence from London through illness, that a reply had not been received from that gentleman. The hon. Secretary read a letter from the Government of Victoria, enclosing a resolution passed by the Melbourne Chamber of Commerce, recommending for the future that grain and flour should be sold at lOOlbs avoirdupois instead of at per bushel, and further, that the same should come into operation on the 17th July next. The Government desired that the Chamber should express an opinion thereon. Mr Palmer suggested that as the subject was of so important a nature, its consideration should be deferred. Mr Walton also thought that the consideration of the matter should he postponed. Such a change as this would create a great deal of confusion, and it would he difficult to make farmers understand it for a considerable time. He thought that before any action was taken in the matter, the agricultural community should be consulted. On the motion of Mr Curtis, seconded by Mr Hassal, the matter was referred to a subcommittee consisting of Messrs Walton, Cobb, Montgomery, and Lane. The Chamber then proceeded to consider the report of the Bankruptcy Committee. The following is the report and recommendations

Report of the Bankruptcy Committee, appionted by the Canterbury Chamber of Commerce, on the 30th day of November, 1869.

Your committee have given their best attention to the subject referred to them, and have already had an opportunity of informing the Chamber of the general character of the conclusions at which they have arrived. Since then the English Bankruptcy Act, of 1869, with two subsidiary measures, has arrived out, and it is with pleasure your committee observe the extent to which it corroborates the views which they then submitted to the Chamber. Indeed, although in some points your committee would abide by the existing law, they believe that, with some exceptions hereafter indicated, the adoption of nearly the whole of the provisions of the English statute would be preferable to any mere attempt at amending the New Zealand Acts of 1867-8. In brevity, clearness of arrangement, and precision of language, it leaves nothing to be desired. Considering, in the first place, proceedings in bankruptcy as distinguished from liquidation out of bankruptcy, the ordinary mode by which proceedings in this colony are commenced is by the debtor filing a declaration of insolvency, and gazetting it forthwith in order to secure full protection from legal process against his estate or person. Ten days must then elapse before any creditor can petition for his adjudication, and only five days are allowed for a creditor to take this step. If a creditor petitions during the five days or the debtor does so within the three days following, the declaration then becomes complete as an act of bankruptcy. But, although there are indications that creditors are now becoming the acting parties, the usual course has been for the debtor to be the petitioner, and it is not uncommon for him to allow the proceedings to fall through at this stage. His protection continues until his declaration is taken off the file on special application, and there are practically no certain means available of preventing him from filing another declaration immediately after. Your committee can see no reason why a declaration of insolvency should not be, as in England, an act of bankruptcy ipso fado on its being filed, nor why it should not be open to either debtor or creditor to proceed on it, either immediately,or at any time afterwards, within which proceedings are allowed to commence in other cases of acts of bankruptcy. Upon the first point they would observe that there is no other act of bankruptcy which depends for its becoming so upon the after acts of others, or even o f the debtor himself. If a debtor “ begins to keep house,” or executes a “fraudulent deed,” so soon as the fact is capable of proof, the creditor is advised to proceed; and, upon proof, the Court grants the order of adjudication. The proof, too, which, in these cases, has to be inferred from circumstances, of the debtor’s inability to meet his engagements, is, in this case, supplied by the express declaration of the debtor himself, made under professional advice, recorded in Court, and publicly gazetted. If he has made it unadvisedly, it need not be conclusive. lie can apply to the Court to take it oil the file; or, he can, on shewing cause against a creditor’s petition,get it dismissed; or he can even after adjudication, annul the order on showing that he is really able to meet his engagements. Noiujustiee,therefore,it appears to your committee, can result to the debtor, while great advantage will accrue to creditors, by assimilating our practice in this respect to that of the Knglish system. If, then, the Declaration of Insolvency is to be an Act of Bankruptcy ipto facto, no reason is apparent to your committee why the proceedings to be taken upon it should be regulated differently from other cases, while the inconveniences arising from the present restrictions upon the creditor’s action are too

Obvious to require comment. But it will be necessary, in order to prevent a debtor from abusing the protection afforded by hia declaration, to provide that such protection shall continue only until the expiration of the time necessary for obtaining an order of adjudication, and shall depend, after obtaining it, upon the express order of the Court in each case.

The English Act goes further. It deprives the debtor altogether of the light to petition for his own adjudication. Your committee are as yet without information as to the reasons which have influenced the English Legislature in thus deciding, but they may observe that the alteration effected by it in the English practice is practically of little moment, while in this colony it would go to overthrow the entire system of our procedure. Your committee are not prepared to recommend an entire change in a system which they believe has not worked badly, except in some points of detail; and they thiuk that if the alterations, which they have already suggested, and some which they have to recommend in other branches of the subject are adopted, the defects upon this head of our present procedure will have been sufficiently dealt with.

Your committee think that the lists of debts and assets at present required to be filed by a debtor on declaring his insolvency and petitioning for adjudication, may be dispensed with. They must occasion some expense to the estate, and they answer no good purpose, it appears to your committee, which would not be better accomplished by requiring the debtor’s books, together with a full statement of his affairs, to be placed at the disposal of the creditors at their first meeting. For the protection of creditors between the declaration of insolvency and the first meeting the official trustee must be retained; but your committee think that the payment to the Colonial Treasury of a small fee upon each estate would furnish an adequate fund for his remuneration, and one preferable to the present system of per centage. His duties, your committee think, ought to be confined to holding possession of the estate until the creditors’ trustee be appointe *, with power to sell perishables, but not otherwise to deal with the assets unless by order of the Court, Where the creditors do not appoint a trustee, the estate should vest in him with full powers ; but as in these cases the estate is usually nil, his duties would practically consist of receiving information and reporting to the Court. In respect of the realisation of assets, the goodness of a bankruptcy law may be tested by the extent to which it arms the creditors with full knowledge of the debtors’ affairs, and full power of dealing with his estate immediately on his becoming bankrupt. An examination of our present Act will shew that more extensive powers are vested in the first meeting of creditors than have certainly been exercised in this Province, but some additions may be suggested. Presenting the whole at one view, your committee think that the meeting should still be presided over by an officer of the Supreme Court, whose duty it should be to look to the bona fides as well as to the formal regularity of the proceedings. This officer should have power to administer an oath, and to receive proofs. The debtor should be bound to submit himself to examination, and produce all books and papers. To ensure his doing so, the continuance of his protection should be made dependent on the resolution of the creditors. The meeting should adjourn itself from time to time, and in addition to the appointment of trustee and supervisors should give all necessary directions respecting the realization of assets, bringing suits, the times for payment of dividends, the calling of future meetings, &c. As to the supervisors, your Committee have nothing to recommend but the continuance of the existing but hitherto much overlooked law. As the law stands, the supervisors can examine the claims of individual creditors, and can authorise the trustee to refuse a dividend : they can require, and by a simple and expeditious process can compel, the trustee to produce his accounts for periodical audit : they can refuse their consent to a litigation, after which the trustee will proceed at his own peril as to costs. They can call creditors’ meetings, and obtain any direction they may require upon any unforeseen emergency. The Act is still new, and is so large a change from the repealed statute of 1862 that it is not surprising that these powers, which are scattered through disconnected clauses, have not been fully understood ; but your Committee must observe that the success of any Bankruptcy Act must depend on the energy and intelligence with which it is worked by the mercantile body. Some part of the Illsuccess of the Act of 1867 undoubtedly rests with them.

In regard to the distribution of assets, the provisions of both Acts are probably much the same in effect, but those of the English Act are characterised by greater simplicity, and your committee think will better protect the interests of creditors. In particular, the English Act does not give the debtor any percentage out of his assets in the event of his estate realizing a favourable dividend, and your committee unhesitatingly recommend the entire repeal of the provisions to that effect iu our Act. They think that all that can be reasonably required on the part of the debtor is the right (which they may observe the English Act does not give) of retaining tools of trade and household furniture to a small extent. They think also, that the interests of creditors will coincide with consideration for the debtor in recognizing the principle that the expense of vesting his estate in the creditor’s trustee should in all cases fall on the estate, and if the debtor’s conduct be satisfactory, they would be disposed to add the reasonable costs of obtaining his discharge. But the percentage allowed him by our present Act does not appear to them to be required by justice to the debtor, and has only operated, as they believe, to cause proceedings in bankruptcy to be used as a threat to creditors. In another point, the provisions for enabling trustees to disclaim properties likely to be burdensome to the estate, are in our Act confined to leaseholds, and are not so framed as to ensure sufficient time for deliberation. The English Act provides for all cases of burdensome property, real or personal, and gives the trustee very ample opportunity of ascertaining the value before committing the estate by his decision. There are also provisions (sec. 91) in the English Act avoiding post nuptial family settlements executed within two years anterior to bankruptcy and throwing upon the parties taking under them the burden of proof of the bankrupt’s solvency at the time of execution if executed within ten years prior to the bankruptcy, both of which your committee think should be adopted, except that the period of ten years appears unsuitable to the circumstances of the colony. It is also provided that the debtor cannot obtain his discharge until the creditors have closed the bankruptcy, they having the right to keep it open so long as there may be reason to expect that property may still be coming to the bankrupt available for dividend. Instead, too, of permitting the debtor to apply for his order of discharge immedia tely, but making it ineffectual in case of after-acquired property unless 10s in the pound be divided, the English Act d 'es not allow the debtor to apply at all until he has paid I hat dividend unless under special resolution of a creditors’ meeting authorising his application. In the interim it protects him for three years from adjudication, at the end of which period the whole amount of his unpaid debts becomes equivalent to a judgment debt on bis property, subject to the rights of interim creditors, and enforeible as the Court may in each case direct. Your committee think that in all these particul rs the; provisions of the English Act should be adopted. The efficient working both of the English Acts and our own has been made to depend largely on the preparation by the judges of general rules ; and in England care appears to have been taken for the promulgation of these rules cotcraporaneously with the Act coming into force. In this colony, your committee regret to observe that during three years that the Act has been in operation it has not been found possible to frame the necessary rules, and great inconvenience has been the result. To go no further, it has

embarrassed the relation between secured and unsecured creditors, and seems practically to have absolved the trustee from the necessity of accounting. It is obviously desirable, that in a matter of administration, like Bankruptcy, which involves a multiplicity of small details, as much as possible of its working should be regulated by rules, which, unlike an Act of Parliament, can readily be modified when necessary ; and your committee hope that in connection with any new measure this omission will be avoided.

The English Act makes no provision for Gazetting proceedings—a matter perhaps considered to be properly left to general rules. Your committee think that this part of our system has worked advantageously, although it may be worthy of consideration whether it should not be the act of the Government official rather than of the party, being paid for of course like any other service rendered to the estate.

Proceeding next to liquidation out of bankruptcy, the views recently submitted by your committee appear to receive the entire sanction of the English Legislature. By the English Act a creditors’ meeting, if duly summoned under sanction of the Court, has the same power of representing the general body, and acting on their behalf, whether it is consequent upon au order of adjudication or is convened without it. Their resolution if agreed to by a majority in number representing three-fourths in value of those present (personally or By proxy) binds the general body to the choice of a trustee with or without supervisors, and to such additional resolutions as may be come to in respect of the realisation and distribution of the assets. The Act vests the estate with all necessary powers in the trustee so chosen, without any deed, and makes the debtor’s discharge the act of a subsequent meeting. By a similar majority, confirmed by a majority in number and value of a subsequent meeting, each meeting being held after special notice, the general body may be bound to a composition. But no resolution agreeing to a composition is to be valid unless certified to the Court by the presiding officer ; nor subject to some provisions for correcting mistakes, will it bind any creditor, whose name and address, and the amount of his debt, are not accurately set forth in the debtor’s statement to the meeting. The manner of summoning and holding creditors’ meetings are left to be prescribed by general rules. Your committee think these provisions generally should be adopted. Care will be needed, especially in case of foreign creditors, to ensure that all creditors have a reasonable opportunity of being represented at the meeting ; and your committee think that on the question of the debtor’s discharge, there ought to be an alternative jurisdiction in the Court. If the creditors are satisfied with his conduct, there seems no reason why they should not give him his discharge ; but if they refuse, the debtor should at least have the option of an appeal.

In conclusion, it is in no formal sense that your committee submit their report to the indulgent consideration of the Chamber. In a matter consisting so purely of minute detail, they are far from supposing that they have in all cases offered the best solution ; and they have felt themselves in fact precluded by the great length to which such an attempt would lead them, from stating their recommendations with the minuteness which alone can ensure their being fully apprehended. They are not drawing a bill, but a report; and the most they can hope for is that they may have contributed some information upon a subject which the more fully it is examined will be only the more found to be encumbered with difficulties.

SuiiMAEY op Recommendations. Your Committee recommend— I. As to Bankruptcy:— 1. That a declaration of insolvency should constitute an Act of Bankruptcy ipso facto on its being filed. 2. That provision be made for gazetting the .declaration immediately on its being filed.

3. That the debtor’s present power to petition for his own adjudication be retained. 4. That a petition of adjudication (by debtor or creditor) may be filed immediately on the declaration being gazetted. 5. That the protection afforded to the debtor by declaring his insolvency continue only until the expiration of the time necessary for obtaining the order of adjudication, and be thereafter subject to special order.

6. That no list of debts and assets be filed on declaring insolvency or applying for adjudication. 7. That there shall be an official trustee, whose duty it shall be to take possession on declaration, or in case of any other act of bankruptcy on adjudication, but not to sell or otherwise dispose of the property (except perishable property), unless by order of the Court, such trustee to be a salaried officer of the Court, payable from the Colonial Treasury. Rees to be charged on each estate in respect of his services.

8. That immediately on adjudication, the creditors meet, with power of adjournment, under presidency of an officer of the Court having power to administer an oath and receive proof of debts. That at this meeting a trustee, not being the official trustee, and supervisors be chosen, and the necessary directions given as to the realisation of the estate (including the sueing for assets) and the times for payment of dividends, and the amount of the trustee’s remuneration fixed. That it be made obligatory on the debtor to attend this meeting and submit himself to examination on oath, and to produce his books and papers, with a detailed statement of his assets andillabilities, all papers at the close of the meeting to be given up to the trustee then appointed, or, if none appointed, to the presiding officer. 9. That it be the duty of the supervisors to meet at stated periods for receiving proof of debts, audit the trustee’s accounts periodically, call creditors’ meetings, consent on behalf of the creditors to sales, suits, compromises, and arbitrations, and to the employment and remuneration of the bankrupt. 10. That at such meetings the trustee and supervisors have power to administer an oath.

11. That by the effectof adjudication all the property belonging or coming to the bankrupt from the date of the earliest act of bankruptcy proved against him (not exceeding twelve months prior to the adjudication) down to the close of the bankruptcy be vested in the trustee, subject to due power of disclaimer as to burdensome property. 12. That voluntary post-nuptial settlements executed within two years prior to bankruptcy be void as against the creditors, and if executed within years prior to the bankruptcy be void unless the claimants under them can show that the bankrupt was solvent «t the time of execution.

13. That the provisions in the existing Acts for vesting a per-centage in the debtor on shewing a favourable dividend be repealed 14. That the period for closing the bankruptcy be left to the discretion of the creditors, subject to appeal to the Court. 15. That no order of discharge be granted till after the close of the bankruptcy, nor until 10s in the £ have been divided, except on special resolution of creditors’ meeting. That an undischarged bankrupt (not convicted of any offence under the bankruptcy laws, nor otherwise excluded by order of the Court) be protected for three years after adjudication, after which period the whole unpaid amount of bis debts be equivalent to judgment debts against his property, subject to the rights of interim creditors, and enforcible according to the direction of the Court in each case.

11. As to liquidation out of bankruptcy. 1. That it be competent to a debtor (whether having committed an act of bankruptcy, or not ; and whether proceedings in bankruptcy have been taken, or not) to summon a genera! meeting of bis creditors, and that be be thereupon protected, and his estate taken possession of by the official trustee, as in bankruptcy. 2. That the creditors meet under presidency of an officer of the court under the same conditions, and with the same duties on the part of the debtor as a creditors’ meeting after adjudication, and that their proceedings be of like validity. 3. That such meeting may, by a majority

in number representing three-fourths in value of the creditors present resolve in favour of liquidation by assignment, and not in bankruptcy, and appoint a trustee with or without supervisors. 4. That the estate vest in the trustees so appointed without deed as in Bankruptcy, and that the trustees have the like powers and responsibilities as a trustee in bankruptcy. 5. That the debtor’s discharge be by some subsequent creditors’ meeting, or by order of the Court.

6. That a majority in number representing three-fourths in value of a creditors’ meeting confirmed by a second majority in number and value of a subsequent meeting, bath meetings being held after special notice, may resolve in favour of a composition. 7. That a resolution agreeing to a composition, shall not be valid until certified by the presiding officer to have been duly passed. 8. That it bind no creditor whose name and address, and the amount of bis debt, are not accurately set forth (subject to due provision for correcting mistakes) in the debtor’s statement presented by him to the creditors’ meeting. On the motion of Mr Hassal, seconded by Mr Walton, the report was received. The Chamber then proceeded to consider the recommendations seriatim. Clauses 1,2, 3,4, 5, and 6 were passed. Clause 7 was passed with a slight amendment. A long discussion ensued on clause 8, and the further consideration of it and the other clauses was postponed until Wednesday next. The following committee was appointed to consider and report upon the tariff •.—Messrs Stevens, Turner, Walton, Nathan, Inglis, and Curtis. Messrs Hassal and Nathan were appointed auditors for the year.